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15 February, 18:18

Prepare summary journal entries to record the following transactions for a company in its first month of operations. a. Raw materials purchased on account, $90,000. b. Direct materials used in production, $36,500. Indirect materials used in production, $19,200. c. Paid cash for factory payroll, $50,000. Of this total, $38,000 is for direct labor and $12,000 is for indirect labor. d. Paid cash for other actual overhead costs, $11,475. e. Applied overhead at the rate of 125% of direct labor cost. f. Transferred cost of jobs completed to finished goods, $56,800. g. Sold jobs on account for $82,000. The jobs had a cost of $56,800.

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  1. 15 February, 18:48
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    The journal entries are shown below:

    a. Raw materials inventory A/c Dr $90,000

    To Accounts payable A/c $90,000

    (Being raw material is purchased on credit)

    b. Work in progress inventory A/c Dr $36,500

    To Raw materials inventory A/c $36,500

    (Being used in production recorded)

    Factory overhead A/c Dr $19,200

    To Raw materials inventory A/c $19,200

    (Being indirect material used is recorded)

    c. Work in progress inventory A/c Dr $38,000

    Factory overhead A/c Dr $12,000

    To cash A/c $50,000

    (Being factory payroll is paid in cash)

    d. Factory overhead A/c Dr $11,475

    To Cash A/c $11,475

    (Being other actual overhead is paid for cash)

    e. Work in progress inventory A/c Dr $47,500 ($38,000 * 125%)

    To Factory overhead A/c $47,500

    (Being applied overhead is recorded)

    f. Finished goods inventory A/c Dr $56,800

    To Work in progress inventory A/c $56,800

    (Being transferred goods are recorded)

    g. Accounts receivable A/c Dr $82,000

    To Sales A/c $82,000

    (Being jobs are sold on account)

    Cost of goods sold A/c Dr $56,800

    To Finished goods inventory A/c $56,800

    (Being the job cost is recorded)
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